Effective Use of Technology for Welfare Schemes – Case of MGNREGS

NREGA enrolment enhanced by a whopping 44% in drought affected blocks

JAM trinity increased the e-payment from 77.34 % 2014-15 to 99 % in 2018-19

Under the World’s biggest rural job scheme, Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), there was 20 % increase in the supply of work in blocks that are affected by drought. This suggests that the supply of work under MGNREGS also responds to the increase in demand in the blocks affected by drought. The Economic Survey 2018-19 was tabled in Parliament today by the Union Minister for Finance and Corporate Affairs, Smt Nirmala Sitharaman states that muster rolls, a form of attendance register signed by workers increased by 19 % in the blocks that were not affected by drought. In contrast, muster rolls increased by an enormous 44 % in the blocks that were affected by drought. Thus, the actual work done under MGNREGS also increased significantly in blocks affected by draught due to the use of Aadhar linked Payments, ALP. This increase was more than double the increase in blocks that were unaffected by drought.

She said, though the MGNREGS was made effective from February 2006, the streamlining of the programme occurred in 2015 when the government harnessed the benefits of technology. This, inter alia, included the implementation of Direct Benefit Transfer (DBT) and linking it Aadhar linked Payments (ALP). It leveraged the Jan Dhan, Aadhaar and Mobile (JAM) trinity to credit wages directly into MGNREGS workers’ bank accounts, thereby reducing scope for delays in payment.

The Survey points out that National electronic Fund Management System (NeFMS ) is implemented in 24 States and 1 Union Territory wherein payment of wages is being credited directly to the bank/ post office accounts of MGNREGS workers by the Central Government. This initiated the implementation of the DBT in the Scheme. As a result of this initiative, the e-payment under MGNREGS has increased from 77.34 per cent in FY 2014-15 to 99 per cent in FY 2018-19.

In 2015, the Government introduced Aadhar Linked Payments (ALP)  in MGNREGS in 300 districts that had a high banking penetration. Remaining districts were covered under ALP in 2016. Conceptually, ALP could speed up the wage payment cycle in the following two ways.

Out of the 11.61 crore active works under MGNREGS, Aadhaar numbers of 10.16 crore workers (87. 51 per cent)  have been collected and seeded. Almost 55.05 per cent of all payments under MGNREGS are through Aadhaar Based Payment System (ABPS) , the number of beneficiaries and the fund transferred under DBT under the Scheme has jumped manifold from 2015-16 to 2018-19.

 Muster rolls have shown a significant increase after implementation of DBT indicating that more people are reporting for work. The total person days and total person days of vulnerable sections (Women, SCs and STs) is also higher in the post DBT years as compared to the pre-DBT years indicating that employment generated is higher post implementation of DBT.  It is also heartening to note that more than 90 per cent of the person days benefit the vulnerable sections.

The Survey states that to further increase the effectiveness of the Scheme, the definition of ‘works’ under the Scheme should be regularly reviewed and amended in the light of the requirements. Inclusion of de-silting of canals and water bodies in the Water Conservation Mission would enhance their storage capacity and mitigate the frequency of floods. Similarly, to enhance livelihoods for households can be reinforced by enabling them to acquire suitable skills, which in turn will help them increase incomes and provide horizontal and vertical mobility to them. The convergence of MGNREGS with Deen Dayal Upadhyaya Grameen Kaushalya Yojna (DDU-GKY) and involvement with women Self- Help Groups needs to be strengthened so that supply for skilled wage labour increases. The focus needs to be on the diversification of the livelihoods with multiple sources of income for them to come out of poverty.

The program was initiated to ameliorate rural distress by providing at least 100 days of manual labor at minimum wages to anyone who seeks employment under the program. Creation of productive assets for prescribed quality and durability, social inclusion, gender, parity, social security and equitable growth form the founding pillars of the program. In the first decade of its existence, MGNREGS has been saddled with several inefficiencies, including widespread corruption, political interference, leakage, and significant delay in wage payment etc. The programme was reviewed in 2015 and the government initiated major reforms using technology and emphasized on bringing in more transparency and accountability, robust planning and creation of durable productive assets.

Direct Benefit Transfer via Aadhaar payments boosted e-payments and increased rural work participation and access for vulnerable groups. Implementation of Direct Benefit Transfer through Aadhar Linked Payments, NeFMS and the JAM trinity shifted MGNREGS wage disbursal to electronic channels, increasing e-payments to nearly universal coverage. Aadhaar seeding covered the majority of active workers and ABPS handled a substantial share of payments. These reforms coincided with significant rises in muster rolls, total person-days and employment for vulnerable groups, with particularly large increases in drought-affected blocks. Policy recommendations include regular review of eligible works, inclusion of water-body desilting, convergence with skill programs and stronger Self-Help Group engagement to enhance livelihoods and asset creation.